Risk Management Takes on Increasing Importance

Mark Taylor, Contributing Writer

Cybersecurity and more stringent staffing needs are among the emerging risk management challenges for hospitals, say industry advisors.

June 2—Risk management strategies will become increasingly important in determining the credit strength of not-for-profit hospitals and health systems, according to a new report.

Navigating changes spurred by the Affordable Care Act (ACA) and legislation proposed to repeal and replace parts of it, the American Health Care Act (AHCA), will require hospitals to mitigate heightened risks in areas including information technology, cybersecurity, clinical quality, and brand protection,
according to a new report from Moody’s Investors Service.

“Maintaining high clinical quality will increasingly impact financial performance and reduce risk of brand impairment as reimbursement moves away from a fee-for-service model and towards a greater emphasis on value and outcomes,” the report stated. “A hospital’s ability to improve quality of
care and the patient experience will increasingly impact its financial performance. Furthermore, perceived quality is tied to physician and nursing recruitment, fundraising, and community relationships. The perception of poor quality can have a lasting negative impact on an organization's brand and
significantly hurt profitability.”

“In 2015, hospitals with above-average value-based purchasing (VBP) scores produced a median operating cash flow margin of 11.7 percent, compared to 8.6 percent for organizations with below-average VBP scores. The patient experience, which accounts for up to 30 percent of the VBP
score, has a similar correlation,” Moody’s authors said.

Health Reform Impact

The fate of the ACA and the AHCA poses risks to hospitals, Brad Spielman, a lead author, vice president, and senior credit officer with Moody’s, said.

“It’s hard to plan around unknowns and the future of both laws is presently uncertain. The risk is that large areas of reimbursement will change and regardless of how they change, they create risk,” Spielman said in an interview. “Both laws speak to the possibility of significant reductions in
government-based funding, which will impact hospitals pretty significantly.”

Richard Kusserow, CEO of the consulting firm Strategic Management Services, said regardless of congressional action on health reform, it is certain that the Trump administration will pump more money into fraud and claims enforcement.

“Hospitals will continue to face regulatory risk,” Kusserow said in an interview. “They will face large fines, penalties, and reputational damage from corrupt arrangements and inappropriate claims.”

Hospital violations of the Anti-Kickback and Stark laws in relationships with doctors and vendors expose hospitals’ brands and finances, he said.

“Virtually all hospital kickback settlements with government entities have had attorney fingerprints on them, so that shouldn’t stop scrutiny. And the [OIG] has said that corrupt arrangements often mask quality of care issues, which also pose high risks to hospitals,” Kusserow said.

Kusserow, who worked for the OIG for 11 years, said submitted medical claims have gotten many hospitals in trouble with regulators and government contractors.

“The [corporate integrity agreements] that come with settlement agreements are sometimes even more costly than the penalties,” Kusserow said. “Yet, we see these two risk areas receiving the least amount of attention in hospital risk analysis. Every hospital should have an arrangements database
as part of its risk analysis process and those reviews should be done regularly.”

Hospitals should conduct mock audits of their claims processing, test them for payment accuracy, and stop payments until corrections are made, he said. If patterns persist, training or termination should follow.

Hospital staff should determine which DRGs are most error prone, which pose the highest risk of government attention, and focus on fixing those errors first, Kusserow said.

Maureen McGovern, director of risk management and patient safety officer for the South Nassau Communities Hospital in Long Island, New York, said maintaining and improving clinical quality is the primary focus of South Nassau.

“That’s what we’re here for, it is the mainstay of our business. And the rest falls in place if you do that successfully. Patients who’ve had good outcomes will recommend you. Your reputation will grow in a positive way. And good reimbursement will follow, especially through pay for
performance models,” McGovern said in an interview.

Cybersecurity Risk

McGovern, who has worked in risk management for 31 years, said cybersecurity is among the most imminent risks.

“Not just electronic medical records, but much of our high tech equipment also stores information and we need to make sure they’re not hacked and the equipment is compromised,” she said.

“If you have a breach and your system goes down for days, are you prepared to document care by manually writing on paper?” Gaffey said. “Can you provide care without the electronic medical records? Have you created an emergency preparedness plan? If you have a
young work force that hasn’t worked with paper, you may need to provide education and training in real time. How would a major slowdown and business interruption impact your billing cycle? Hospital leaders need to think about those downstream effects.”

Because more high-acuity patients are coming to hospitals, Gaffey, a nurse and the past president of the American Society for Healthcare Risk Management (ASHRM), said finding a workforce to support that patient base is growing in importance and poses a
looming risk to many hospitals.

John Sanchez, vice president of compliance and risk management for consulting firm Pendulum, said many hospitals face the daunting task of balancing quality and risk management in the era of value-based payment.

“If hospitals score in the bottom quartile of their peers in the prevalence of hospital-acquired infections, for example, they can be penalized up to 5 percent of their Medicare reimbursements,” Sanchez said in an interview. “That’s a hefty sum that presents large risks to hospital financial
viability.”

Keys to Success

Hospitals that fare better in managing professional liability risk establish strong risk management and patient safety programs, improve the integrity and quality of documentation efforts, proactively review charts, and improve the training and education of their providers, he said.

“Having strategies to communicate well with patients and families when something does occur and having a disclosure of adverse events program while proactively managing potentially compensable events all go a long way to reducing risk,” Sanchez said.

Mike Midgley, president of ASHRM and vice president of healthcare risk engineering at the international insurance firm Swiss Re Corporate Solutions, said prudent programs identify the risks to the strategy and operations of those organizations.

“The best approach is to provide data based on enterprise risk management (ERM) analysis, which will engage key stakeholders in our organizations,” Midgley said in an email. “A primary purpose supporting the ERM program is encouraging a formalized procedure for making thoughtful decisions throughout
the system, requiring consideration of protecting the assets of the organization, and contemplating creating value. The ERM process should be familiar to everyone and used daily in thinking about risk and making decisions.”

The risk management process includes identifying and analyzing loss exposures, using alternative risk techniques, selecting the best risk management techniques and implementing those, and monitoring and improving the risk management program, he said.

Hospitals that fail to respond appropriately to imminent risks “will be left behind,” David Petrous, safety and risk manager for Hendricks Regional Health, said in an e mail. “While financial risk cannot be entirely identified or eliminated, a properly designed and present enterprise
risk management program can greatly mitigate or minimize exposure.”

Cybersecurity and more stringent staffing needs are among the emerging risk management challenges for hospitals, say industry advisors.

June 2—Risk management strategies will become increasingly important in determining the credit strength of not-for-profit hospitals and health systems, according to a new report.

Navigating changes spurred by the Affordable Care Act (ACA) and legislation proposed to repeal and replace parts of it, the American Health Care Act (AHCA), will require hospitals to mitigate heightened risks in areas including information technology, cybersecurity, clinical quality, and brand protection,
according to a new report from Moody’s Investors Service.

“Maintaining high clinical quality will increasingly impact financial performance and reduce risk of brand impairment as reimbursement moves away from a fee-for-service model and towards a greater emphasis on value and outcomes,” the report stated. “A hospital’s ability to improve quality of
care and the patient experience will increasingly impact its financial performance. Furthermore, perceived quality is tied to physician and nursing recruitment, fundraising, and community relationships. The perception of poor quality can have a lasting negative impact on an organization's brand and
significantly hurt profitability.”

“In 2015, hospitals with above-average value-based purchasing (VBP) scores produced a median operating cash flow margin of 11.7 percent, compared to 8.6 percent for organizations with below-average VBP scores. The patient experience, which accounts for up to 30 percent of the VBP
score, has a similar correlation,” Moody’s authors said.

Health Reform Impact

The fate of the ACA and the AHCA poses risks to hospitals, Brad Spielman, a lead author, vice president, and senior credit officer with Moody’s, said.

“It’s hard to plan around unknowns and the future of both laws is presently uncertain. The risk is that large areas of reimbursement will change and regardless of how they change, they create risk,” Spielman said in an interview. “Both laws speak to the possibility of significant reductions in
government-based funding, which will impact hospitals pretty significantly.”

Richard Kusserow, CEO of the consulting firm Strategic Management Services, said regardless of congressional action on health reform, it is certain that the Trump administration will pump more money into fraud and claims enforcement.

“Hospitals will continue to face regulatory risk,” Kusserow said in an interview. “They will face large fines, penalties, and reputational damage from corrupt arrangements and inappropriate claims.”

Hospital violations of the Anti-Kickback and Stark laws in relationships with doctors and vendors expose hospitals’ brands and finances, he said.

“Virtually all hospital kickback settlements with government entities have had attorney fingerprints on them, so that shouldn’t stop scrutiny. And the [OIG] has said that corrupt arrangements often mask quality of care issues, which also pose high risks to hospitals,” Kusserow said.

Kusserow, who worked for the OIG for 11 years, said submitted medical claims have gotten many hospitals in trouble with regulators and government contractors.

“The [corporate integrity agreements] that come with settlement agreements are sometimes even more costly than the penalties,” Kusserow said. “Yet, we see these two risk areas receiving the least amount of attention in hospital risk analysis. Every hospital should have an arrangements database
as part of its risk analysis process and those reviews should be done regularly.”

Hospitals should conduct mock audits of their claims processing, test them for payment accuracy, and stop payments until corrections are made, he said. If patterns persist, training or termination should follow.

Hospital staff should determine which DRGs are most error prone, which pose the highest risk of government attention, and focus on fixing those errors first, Kusserow said.

Maureen McGovern, director of risk management and patient safety officer for the South Nassau Communities Hospital in Long Island, New York, said maintaining and improving clinical quality is the primary focus of South Nassau.

“That’s what we’re here for, it is the mainstay of our business. And the rest falls in place if you do that successfully. Patients who’ve had good outcomes will recommend you. Your reputation will grow in a positive way. And good reimbursement will follow, especially through pay for
performance models,” McGovern said in an interview.

Cybersecurity Risk

McGovern, who has worked in risk management for 31 years, said cybersecurity is among the most imminent risks.

“Not just electronic medical records, but much of our high tech equipment also stores information and we need to make sure they’re not hacked and the equipment is compromised,” she said.

“If you have a breach and your system goes down for days, are you prepared to document care by manually writing on paper?” Gaffey said. “Can you provide care without the electronic medical records? Have you created an emergency preparedness plan? If you have a
young work force that hasn’t worked with paper, you may need to provide education and training in real time. How would a major slowdown and business interruption impact your billing cycle? Hospital leaders need to think about those downstream effects.”

Because more high-acuity patients are coming to hospitals, Gaffey, a nurse and the past president of the American Society for Healthcare Risk Management (ASHRM), said finding a workforce to support that patient base is growing in importance and poses a
looming risk to many hospitals.

John Sanchez, vice president of compliance and risk management for consulting firm Pendulum, said many hospitals face the daunting task of balancing quality and risk management in the era of value-based payment.

“If hospitals score in the bottom quartile of their peers in the prevalence of hospital-acquired infections, for example, they can be penalized up to 5 percent of their Medicare reimbursements,” Sanchez said in an interview. “That’s a hefty sum that presents large risks to hospital financial
viability.”

Keys to Success

Hospitals that fare better in managing professional liability risk establish strong risk management and patient safety programs, improve the integrity and quality of documentation efforts, proactively review charts, and improve the training and education of their providers, he said.

“Having strategies to communicate well with patients and families when something does occur and having a disclosure of adverse events program while proactively managing potentially compensable events all go a long way to reducing risk,” Sanchez said.

Mike Midgley, president of ASHRM and vice president of healthcare risk engineering at the international insurance firm Swiss Re Corporate Solutions, said prudent programs identify the risks to the strategy and operations of those organizations.

“The best approach is to provide data based on enterprise risk management (ERM) analysis, which will engage key stakeholders in our organizations,” Midgley said in an email. “A primary purpose supporting the ERM program is encouraging a formalized procedure for making thoughtful decisions throughout
the system, requiring consideration of protecting the assets of the organization, and contemplating creating value. The ERM process should be familiar to everyone and used daily in thinking about risk and making decisions.”

The risk management process includes identifying and analyzing loss exposures, using alternative risk techniques, selecting the best risk management techniques and implementing those, and monitoring and improving the risk management program, he said.

Hospitals that fail to respond appropriately to imminent risks “will be left behind,” David Petrous, safety and risk manager for Hendricks Regional Health, said in an e mail. “While financial risk cannot be entirely identified or eliminated, a properly designed and present enterprise
risk management program can greatly mitigate or minimize exposure.”

HFMA RESOURCE LIBRARY

Patient financial engagement is more challenging than ever – and more critical. With patient responsibility as a percentage of revenue on the rise, providers have seen their billing-related costs and accounts receivable levels increase. If increasing collection yield and reducing costs are a priority for your organization, the metrics outlined in this presentation will provide the framework you need to understand what’s working and what’s not, in order to guide your overall patient financial engagement initiatives and optimize results.

No two patients are the same. Each has a very personal healthcare experience, and each has distinct financial needs and preferences that have an impact on how, when and if they chose to pay their healthcare bill. It’s no longer effective to apply static billing techniques to solve the complex challenge of collecting balances from patients. The need to tailor financial conversations and payment options to individual needs and preferences is critical. This presentation provides 10 recommendations that will not only help you improve payment performance through a more tailored approach, but take control of rising collection costs.

This white paper, written by Apex Vice President of Solutions and Services, Carrie Romandine, discusses the importance of patient segmentation and messaging specifically related to the patient revenue cycle. Applying strategic messaging that is tailored to each patient type will not only better educate consumers on payment options specific to their billing needs, but it will maximize the amount collected before sending to collections. Further, targeted messaging should be applied across all points of patient interaction (i.e. point of service, customer service, patient statements) and analyzed regularly for maximized results.

This white paper, written by Apex President Patrick Maurer, discusses methods to increase patient adoption of online payments. Providers are now seeking ways to incrementally collect more payments due from patients as well as speeding up the rate of collections. This white paper shows why patient-centric approaches to online payment portals are important complements to traditional provider-centric approaches.

Increased electronic engagement between healthcare providers and patients provides significant opportunities for improving revenue cycle metrics and encouraging patients to access EHRs. This article, written by Apex Founder and CEO Brian Kueppers, explores a number of strategies to create synergy between patient billing, online payment portals and electronic health record (EHR) software to realize a high ROI in speed to payment, patient satisfaction and portal adoption for meaningful use.

Faced with a rising tide of bad debt, a large Southeastern healthcare system was seeing a sharp decline in net patient revenues. The need to improve collections was dire. By integrating critical tools and processes, the health system was able to increase online payments and improve its financial position. Taking a holistic approach increased overall collection yield by 10% while costs came down because the number of statements sent to patients fell by 10%, which equated to a $1.3M annualized improvement in patient cash over a six-month period. This case study explains how.

To maintain fiscal fitness and boost patient satisfaction and loyalty, healthcare providers need visibility into when and how much they will be paid–by whom–and the ability to better navigate obstacles to payment. They need payment clarity. This whitepaper illuminates this concept that is winning fans at forward-thinking hospitals.

Financial services staff are always looking for ways to improve the verification, billing and collections processes, and Munson Healthcare is no different. Read about how they streamlined the billing process to produce cleaner bills on the front end and helped financial services staff collect more than $1 million in additional upfront annual revenue in one year.

Effective revenue cycle management can be a challenge for any hospital, but for smaller providers it is even tougher. Read how Wallace Thomson identified unreimbursed procedures, streamlined claims management, and improved its ability to determine charity eligibility.

Before launching an energy-efficiency initiative, it’s important to build a solid business case and understand the funding options and potential incentives that are available. Healthcare leaders should consider taking the steps outlined in the whitepaper to ease the process of gaining approval, piloting, implementing, and supporting sustainability projects. You will find that investing in sustainability and energy efficiency helps hospitals add cash to their bottom line. Discover how hospitals and health systems have various options for funding energy-efficient and renewable-energy initiatives, depending on their current financial structure and strategy.

Health care is a dynamic mergers and acquisitions market with numerous hospitals and health systems contemplating or pursuing formal arrangements with other entities. These relationships often pose a strategic benefit, such as enhancing competencies across the continuum, facilitating economies of scale, or giving the participants a competitive advantage in a crowded market. Underpinning any profitable acquisition is a robust capital planning strategy that ensures an organization reserves sufficient funds and efficiently onboards partners that advance the enterprise mission and values.

The success of healthcare mergers, acquisitions, and other affiliations is predicated in part on available capital, and the need for and sources of funding are considerations present throughout the partnering process, from choosing a partner to evaluating an arrangement’s capital needs to selecting an integration model to finding the right money source to finance the deal. This whitepaper offers several strategies that health system leaders have used to assess and manage capital needs for their growing networks.

Announcements from several commercial payers and the Centers for Medicare and Medicaid Services (CMS) early in 2015 around increased efforts to form value-based contracts with providers seemed to point to an impending rise in risk-based contracting. Rather than wait for disruption from the outside in, health care providers are now making inroads on collaborating with payers on various risk-based contracting models to increase the value of health care from within.

Yuma Regional Medical Center (YRMC) is a not-for-profit hospital serving a population of roughly 200,000 in Yuma and the surrounding communities.
Before becoming a ZirMed client, Yuma was attempting to manually monitor hundreds of thousands of charges which led to significant charge capture leakage. Learn how Yuma & ZirMed worked together to address underlying collections issues at the front end, thus increasing Yuma’s overall bottom line.

Kindred Hospital Rehabilitation Services works with partners to audit the market and the facility’s role in that market to identify opportunities for improvement. This approach leads to successes; Kindred’s clinical rehab and management expertise complements our partners’ strengths. Every facility and challenge is unique, and requires a full objective analysis.

Qualified coders are getting harder to come by, and even the most seasoned professional can struggle with the complexity of ICD-10. This 5-Minute White Paper Briefing explains how partnerships can help improve coding and other key RCM operations potentially at a cost savings.

The point of managing your revenue cycle isn’t just to improve revenue and cash flow. It’s to do those things effectively by consistently following best practices— while spending as little time, money, and energy on them as possible.

The reasons claims are denied are so varied that managing denials can feel like chasing a thousand different tails. This situation is not surprising given that a hypothetical denial rate of just 5 percent translates to tens of thousands of denied claims per year for large hospitals—where real‐world denial rates often range from 12 to 22 percent. Read about how predictive modeling can detect meaningful correlations across claims denials data.

Emergency Mobile Health Care (EMHC) was founded to be and remains an exclusively locally owned and operated emergency medical service organization; today EMHC serves a population of more than a million people in and around Memphis, answering 75,000 calls each year.

Since the Physician Quality Reporting Initiative (PQRI) introduction, CMS has paid more than $100 million in bonus payments to participants. However, these bonuses ended in 2015; providers who successfully meet the reporting requirements in 2016 will avoid the 2% negative payment adjustment in 2018, so now is the time to act! Included in this whitepaper are implications of increasing patient responsibility, collections best practices, and collections and internal control solutions.

Getting paid what your physician deserves—that’s the goal of every biller. Yet even for the best billers, achieving that success can be elusive when denials stand in the way of success, presenting challenges at every turn. Denials aren’t going away, but you can learn techniques to manage and even prevent them.Join practice management expert Elizabeth W. Woodcock, MBA, FACMPE, CPC, to: Discover methods to translate denial data into business intelligence to improve your bottom line, determine staff productivity benchmarks for billers, and recognize common mistakes in denial management.

Read more about factors contributing to the changes in the post-acute marketplace and what it means for manufacturers, physicians, clinicians, patients, and post-acute facilities as they anticipate the transition to the second curve.

HSG helped the physicians and executives of St. Claire Regional in Morehead, Kentucky, define their shared vision for how the group would evolve over the next decade. As well as, develop the strategic and operational priorities which refocused and accelerated the group’s evolution.

The client was a nine-hospital health system with 14 clinics serving communities in a multi-state market with very limited access to care, poor economic conditions, high unemployment, and a heavy Medicare/Medicaid/uninsured payer mix. In most of these communities, the system was the sole source of care.
Though the clinics were of substantial size (they employed 98 physicians) and comprised of multiple specialists, the physicians functioned as individuals and the practices lacked any real group culture.

Clinical integration can be expensive, but it doesn’t have to be, as this four-step road map for developing a CIN proves. Does it have to cost millions to initiate a clinical integration strategy?
Contrary to popular belief, we have clients who have generated substantial shared savings and a significant ROI over time, without massive investments. Yes, some financial capital is required for resources the CIN providers can’t bring to the table themselves. But the size of that investment can be miniscule relative to the value it produces: improved outcomes and documentation for payers.

Today’s concerns about physician compensation are the result of the changing healthcare environment. The transition to value is slow, but finally becoming a reality. Proactive hospitals want to ensure that provider incentives are properly aligned with ever-increasing value-based demands.
This report focuses on the three big questions HSG receives about adding value to physician compensation; Why are organizations redesigning their provider compensation plans? What elements and parameters must be part of successful compensation plans? How are organizations implementing compensation changes?

Revenue Cycle Management has become an even more complex issue with declining reimbursements, implementation of Electronic Health Records, evolving local carrier determinations (LCD), and payer credentialing [The emphasis on healthcare fraud, abuse and compliance has increased the importance of accuracy of data reporting and claims filing).
The efficiency of a medical practice’s billing operations has critical impact on the financial performance. In many cases, patient billings are the primary revenue source that pays staff salaries, provider compensation and overhead operating cost. Inefficiencies or inaccurate billing will contribute to operating losses.

This publication identifies and outlines the necessary characteristics of a fully-functioning clinically integrated network (CIN). What it doesn’t do is detail how hospitals and providers can participate in the value-based care environment during the development process.
One common misconception is that the CIN can’t do anything significant until it has obtained the FTC’s “clinically integrated” stamp of approval. While the network must satisfy the FTC’s definition of clinical integration before single signature contracting for FFS rates and contracts can legally start, hospitals and providers can enjoy three key benefits during the development process.

Nearly half of all Medicare beneficiaries treated in the hospital will need post-acute care services after discharge. For these patients, a stay in an inpatient rehabilitation facility, skilled nursing facility or other post-acute care setting comes between hospital and home.

With the proper process, tools, and feedback mechanisms in place, budgeting can be a valuable exercise for organizations while helping hold organizational leaders accountable. Having a proper monthly variance review process is one of the most critical factors in creating a more efficient and accurate budget. Monthly variance reporting puts parameters around what is to be expected during the upcoming budget entry process.

Managing the cost of patient care is the top strategic priority of most hospital CFOs today. As healthcare shifts to more data-driven decision making, having clear visibility into key volume, cost and profitability measures across clinical service lines is becoming increasingly important for both long-range and tactical planning activities. In turn, the cost accounting function in healthcare provider organizations is becoming an increasingly important and strategic function. This whitepaper includes five strategies for efficient and accurate cost accounting and service line analytics and keys to overcoming the associated challenges.